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Spain business head urges tougher labour, pension laws

Says country should follow German approach

12/11/2013|hrreporter.com|Last Updated: 12/11/2013

(Reuters) — Spain must pass tougher labour and pension laws to foster economic recovery, the head of the Spanish employers' federation said on Wednesday, calling the reforms essential for the country to recover it pre-crisis wealth.

In an interview with Reuters, Joan Rosell, the president of Spain's Confederation of Employers' Organizations, said the government should not rest on its laurels after the Spanish economy expanded in the third quarter for the first time in two years. The government hopes to achieve stronger growth in the last three months of 2013 and in 2014.

Spain's center-right prime minister, Mariano Rajoy, said earlier this week the pace of spending cuts and reforms would slow after two years of intense legislative activity. But the government has also said it would soon update the labor reform it passed in early 2012.

"This is not the last reform we will do, by no means," Rosell said. "In coming years, there will be not one but three or four — those that the world markets we compete with will ask us to do. But basically, one thing sums it up: making legal what is real."

Spain should follow the German approach, Rosell said, and make it easier for employers to temporarily reduce their workforces or to put workers into training programs when business slows, rather than simply firing them.

A 56-year-old Catalan entrepreneur, Rosell is an industrial engineer who heads several mid-sized companies, including a plastic-maker and a street-cleaning firm. He is also a member of the board of Spain's third-biggest bank, La Caixa.

In the past, he has called for stricter regulation of the right to strike. In Wednesday's interview, he said shorter and part-time contracts would help reduce a 26 per cent unemployment rate, the highest in the euro zone after Greece.

Other priorities should be reducing the contracts in use, from more than 40 to just a handful, reforming tax policy to get people working in the black market back into the official economy and restricting drastically the extent to which judges may interpret existing labour law.

"It is nonsense that when a law is made, then the judges come along and interpret it as black or white. This is not serious," Rosell said. "We will try to fix that, because the judges are here to apply the law, not to interpret whether a company can consolidate or restructure."

He also called on the government to shake up unemployment benefits and force jobseekers to join training programs. He wants reforms to public pensions, to make the system more sustainable and deal with an ageing population.

"We made a change in 2011, but we fell short because we didn't anticipate the earthquake of 2011, 2012 and 2013. To confront the new situation we're in, we have to make new changes," Rosell said. The reforms were keys to recovering some of the wealth lost during the five-year crisis, he said.

"It will be difficult, tough, because we were never rich,'' he said. "It was an illusion of being rich and not a reality. And now we have to pay back the debts."